1. MacBook Air 11-inch : 64GB in US is $999.
2. MacBook Air 11-inch : 64GB in France is €1,049
3. $1 = €0.80 at the current time.
So you might think the MacBook Air should be €800 (999 * 0.80). So why it is €249 more? France levies 19.6% TVA (sales tax) on goods and the tax is included in the display price; the US levies sales taxes by state and these are not shown in the displayed prices (sales tax calculated based on destination).
So, what you need to compare is the pre-tax price on both machine. The pre-tax price of the MacBook Air in France is €877. Thus Apple is charging €77 more for the MacBook Air in France than in the US.
The issue is tax rates not Apple.
If you look at the UK you'll find that
4. MacBook Air 11-inch : 64GB is £849
5. $1 = £0.65
So, the £ equivalent of the $999 machine is £650. UK VAT (sales tax) is 20% and thus the pre-tax price of the machine is £707. So Apple is charging £57 more in the UK than in the US.
So they're taking more than a 100 quid extra from each UK customer, "just because".
Finally, I'd guess that Apple pays its contractors in USD. So if today 1 USD = 0.8 EUR, Apple needs to consider the fact that tomorrow it may be 1 USD = 0.9 EUR, and the price needs to reflect this scenario as well (they cannot change the price every single month to reflect the current USD/EUR conversion ratios).
These are details, but add them together, and you'll arrive at that 10% price difference (I guess)
Exchange rate? You keep assuming prices are based on costs. They are not. They are based on profit.
So, when the population in a country has more money to spent, or better but, there where the median, rather than the average, income is the highest, the prices will be too.
So, its cheap in the US because americans are generally more poor, except for a few that throw the average. Off course, "poor" is a very relative concept in this regard.
Income inequality leads to lower prices, and lower margins.
You would need to provide some evidence of this since it is completely counter intuitive. Just look at where US treasuries compared with European bonds to compare which countries/continents are viewed as having less legal risks.
You are correct, if French people will pay more for an Apple product and Apple can price discriminate, they will.
Well, median income is not the deciding factor for willingness to pay, but would certainly be a contributing factor. Supply and demand equations could be more complex or less complex depending on the situation.
This is untrue, proven by the other person's link to wiki.
This is untrue also. The price of gold watches and private jet flights are not affected by income inequality, but rather the size of the target segment (wealthy people). A highly polorized economy with 50% really rich vs 50% really poor would by far more jet rides than a country with a distribution toward the center.
To be fair, you're comparing apples to oranges. Government bond prices reflect the default risk of the government in question. 'Legal risks' include things like getting sued because of perceived defects of your product. Some statistics about that would be interesting, but probably vary greatly by sector: medical devices probably involve lots of ass-covering, whereas something like paper notebooks probably incur fewer lawsuits.
They also reflect overall competitiveness of the country in question which by definition includes legal risks. This is primarily driven from currency fluctuations. In Europe, the German Bund is currently priced stronger than Spanish bonds which is due to default risk.
If each country had their own currency (compare US to Europe as a whole), the bigger fear would not be default risk, it would be inflation risk. This inflation risk is a function of competitiveness.
'Legal risks' include things like getting sued because of perceived defects of your product. Some statistics about that would be interesting, but probably vary greatly by sector: medical devices probably involve lots of ass-covering, whereas something like paper notebooks probably incur fewer lawsuits.
I agree with your assessment of what legal risks are, but keep in mind it is more to do with the change in legal structures rather than current legal structure. If there is no change, businesses can make projections and be confident in them. If there is a risk of change, that is perceived as a larger legal risk.
I don't have statistics, but I would say that a country (France) which elects a president that is perceived as socialist (radical change from previous president) has far more legal risks than the relatively stable US.
Also: I don't think that, in the context of France, the change in presidents is really all that radical. I suppose I could be proven wrong, but I don't see them as being that much further apart than, say, GWB and Obama, even if the latter two are shifted 'rightwards' compared to what the center is in France.
It presents an odd, and totally unscientific, conundrum: I see people on HN claiming it's very legally risky to do business in the US, and many of the people I work with and socialize with who are in leadership positions here see doing business in the EU as overly regulated and difficult to make a profit at. I suspect both of them have missed the mark. Largely, I suspect that both groups have built their opinions out of news articles or other fractional views - which tend to focus on the most sensational, rather than the most common.
That being said, there are some interesting contrasts to be made, and at least some scholars have indicated a growing convergence between the nature of the two legal systems, at least in some regards.
That's a cost I'm willing to take. I don't want sweatshops like China, or CEOs who can threaten all employees with at will firings if they don't give up their stock options (Zynga IIRC). Give me good old fashioned rights any day.
Or, in the cases of Oregon and New Hampshire, does not levy it at at all.
Apple refused to in the past (and still had their crazy EUR prices then). But now, after being dragged to court about it in Italy, and loosing, they at least have a good reason to charge more in Europe. ;)
This is the case for most vendors. E.g. my Panasonic GH2 camera did cost a bit more in Europe than it would have in the US. But I get 24 months of warranty.
When you ask any sales rep. of any big brand in Europe about this, they always use the "24 months warranty vs 12 months elsewhere" excuse.
I'd never buy anything from Apple, so I don't know what excuse they used, being that they illegally dodged the warranty in the past. All I am saying is that they now have both a good excuse as well as a good reason. Anything mechanical is heaps more likely to fail after 24 months than it is after 12.
TL;DR: Apple only "felt" this legislation in the last 12 months.
In the mean time, they do reel in this extra money, for apparently no good reason. It really made me think twice about buying an Apple product again. The products are exquisite, but the service is just terrible.
The warranty policies in the US however seem to be exquisite as well (or were a while ago at least).
They might claim that, but it isn't, and a small claims court or equivalent will prove it to them. All new non-perishable products have two years of warranty, period.
Those judges will usually rule in your favour and Apple might not even send a representative.
To be honest, one would hope that a warranty term of 2 years would force manufacturers to make their products more reliable, rather than keeping the quality constant and increasing the price.
But, in an industry where it is normal to deprecate products in two years now (hi, iPad 1), I guess that's too much to ask.
I am sorry for our planet.
Air 11": R$2699 -> R$3699 (1849 USD)
MBP 13": R$3599 -> R$3999 (2000 USD)
New MBP: R$9999 (4500 USD - WHAT??)
New MBP maxed out: R$15973 (~8000 USD...)
Now, what were you saying about being ripped off?
 just for kicks I maxed out a Mac Pro: R$ 48.959,00, or 1/4 of a nice brand-new apartment.
At least if we could buy the used ones that will appear on eBay...
We do have AWS in Brazil now, though.
Brazil really needs centralized sites (Amazon, CL, etc) because having to check dozens of sites and services just to maybe find something similar to what you need, it can get tedious...and I'm sure I'm not the only one. At least there's Estante Virtual for used books. That's a great service.
As long as we're on the subject, it'd be really nice if there was a way for non-Brazilians to buy things online here. This would be solved if PayPal upped their marketing and really made themselves known on the Brazilian market.
Estante Virtual is really great - the moment I found out about them I stopped going downtown to hunt for books (the good thing is that they're just "forcing" owners to index their collections, and they get to be the middle man).
Dell is established, affordable, good customer service. Competes here with Acer, HP, Toshiba and even cheaper brands probably assembled in Brazil (like Positivo).
Sony Vaios are normally a little bit higher priced, closer to Apple.
The lower end Dells start around R$ 1700 (820 USD): Core i5, 4GB Ram and 1 TB HD. The higher end (gaming or slim) ones, my guess would probably be around R$ 3500 (1700 USD).
Partly, selling into another country is a bit of a headache. That's one reason why US businesses can do so well - they only need to succeed in a single jurisdiction and they'll make a lot of money. Yes, there's different state laws, but pretty much all countries have annoying state laws, and not all countries are as lucrative a market as California alone.
You still have to deal with a lot of very different sovereign states, languages and mentalities. A Swedish customer is not going to feel much different about dealing with Greek business than dealing with a Russian one.
Imagine you want to start a business selling your own brand of briefcases. In the US, you can set yourself up to supply to the whole US (almost) as easily as you can to deal with your local state. Try organizing shipping, sales taxes, customer service etc. for all Europe and you'll probably decide to start with one or two countries.
I also feel more confident about my ability to influence consumer protection entities in case something goes wrong, 'though I'm not sure if that's actually true.
In general though I agree, (from the UK) I'm happy to buy stuff from EU places; I got my Das Keyboard and a Samsung phone (Galaxy Note, useless, sold on ebay) from Germany because it was cheaper (actually, it's also seemingly impossible to buy the Das anywhere in the UK.)
I also happily buy from the US and Canada though, as they make the funniest T-shirts, and the price ends up similar to custom printed in the UK even after import tax (not the £1.50 tax on a $20 t-shirt, but the £8 royal mail stick on any parcel with tax to pay), because of the exchange rate.
I think it's not just that though - there's the sales tax and the extra warranty mentioned elsewhere in thread, plus there's a bit more overhead of doing business in Europe. More languages, different rules, etc.
Adding all of that up, I can totally understand that Apple just slap on the same EUR/USD amount and call it a day.
In the USA, they have the annoying habit of excluding sales tax (presumably on the grounds that it varies wildly from place to place) and that is only added at the checkout.
I guess there might be some problems with the Made in China part (doesn't completely fall under NAFTA), but I honestly can't figure out the tarrif /import duty laws.
But the point is that US prices almost always seem lower =/
p.s.: Steam has a similar policy and one could note that Steam and Apple share a common trait: No real alternative.
If you look at Valve's own game pricing, you will see the euro and dollar are almost on parity when you account for sales tax.
Anyway, thanks for the hint. Pricing of Valve games is indeed near parity, so you are probably correct regarding publishers/Steam.
Difference of 739$ or 590€ feels quite substantial.
It's not fair you singled-out Apple, since this is true for several gadgets I bought, software, or for example more expensive Canon lenses. It's not Apple specific thing.
Also - if you're running a company in EU you can refund overpaid VAT, right? So the only difference is, that currency exchange rate is worst possible.
That's some markup there…
Running a company in the EU is also harder than the US, at least for smaller businesses and startups - that may account for something...
The wife of the Number 2 at BT labs (you know the place that desigend and built Colossus) once got asked what sort of cars her husband worked on :-(
And yes they did think he was a car mechanic.
The good price is the maximum price the client will pay for the service/product.
As long as the users buy, they are going to continue this way.
Cheers to you sir, just because people don't like the truth does not make it any less truthful.
There is still quite a margin, but same type of Electronics devices would have cost more in UK compare to US even without the tax difference. So it is not really a Apple thing at all.
Apple could charge allot less for everything they sell but they don't just because they can get away with it.
I'm sure nobody here really believes that the difference in price between countries has anything to do with keeping the profit margin the same everywhere :)
(Unless you're talking about higher sales tax/VAT?)